Jute industry suffers Rs 1,500cr loss amid commodity crisis: Sources

The Narendra Modi government in November approved reservation standards for the mandatory use of jute bags in packaging for the jute year 2021-22.

The jute sector suffered a theoretical loss of Rs 1,500 crore due to the 4.81 lakh dilution of jute bales ordered in favor of plastics for food grain packaging during the current season, have industry sources said Sunday.

The dilution was observed despite support from the Center and the Mamata Banerjee government in West Bengal, a major jute-producing state, they said.
“In November and December, there was a 4.8 lakh dilution of jute bag bales because the millers were unable to provide this amount of packing material. This resulted in an estimated loss of Rs 1,500 crore, ”an industry source told PTI.

The Narendra Modi government in November approved reservation standards for the mandatory use of jute bags in packaging for the jute year 2021-22.
The standards provide for a reserve of 100 percent food grains and 20 percent sugar that must be packaged in jute bags.
The Center decided to protect the interests of domestic producers of raw jute, after the West Bengal government asked it not to dilute the mandatory packing order, another industry source said.

However, the Standing Advisory Committee on the Packaging of Food Grains in Jute Sacks had recommended dilution of the order.
“The PM and CM have given full support, but the problem lies in the ceiling price of raw jute which is the main bottleneck in increasing the production of the packaging material,” a miller said under cover of anonymity.

Elaborating on the problem facing the spinning mills, he said, the going market price for raw jute is around 7,200 rupees per cwt, while the jute commissioner’s office had imposed a ceiling price of 6,500 rupees per quintal for the supply of raw material for the spinning mills.

“We are not able to buy the raw material at the fixed price, and therefore the production and supply of the burlap bags has been hampered,” he said.
The jute mills were supposed to supply 2.50 lakh bales of sacks in November and 2.31 lakh bales in December, but they did not do so as there was chaos in the market over the fixing of the sack. raw jute prices, the sources said.

The total annual purchase of jute bags by the Center and state agencies is approximately Rs 12,000 crore.

Currently, the going price for a bale of jute bags (1 bale equals 500 jute bags) is around 31,000 rupees.
Indian Jute Mills Association has revised its supply commitment from 16.25 lakh bales to 13.5 lakh bales for Rabi’s 2022-2023 marketing season, as raw material issues may further affect mill production, the sources said.

The Jute Commissioner’s Office, however, allayed fears of any crisis and stressed that there was no shortage in production.
The government has already started purchasing jute sacks for Rabi’s crops, but there was a backlog of 3 lakh bales, which had to be supplied for the Kharif season by November 1, an IJMA official said. .

In the 2022-2023 season, millers can supply up to 28.5 lakh bales, while the government’s total annual jute bag requirement will be around 45.88 lakh bales, of which 26.8 lakh bales are lakh bales are for rice and 19.08 lakh bales for wheat, they mentioned.

According to a committee of experts, the production of raw jute is set at 85-90 lakh bales during the year. Jute mills should consume 70 lakh bales, while industrial consumption would be around 10 lakh bales and exports should be two lakh bales.

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